The regulator said it expects the findings of the review to be published early next month.
The FSA has been visiting a selection of broker firms to determine whether they have been adequately advising customers on self-cert deals and the regulator admitted it was looking for cases where incomes have potentially been inflated in order that clients get the mortgage.
Robin Gordon-Walker, spokes-person at the FSA, said: “This review started around the same time as our review into the non-conforming sector. It’s not a mystery shopping exercise.
“It was more a supervisory exercise where we have gone to visit firms face-to-face. It has been done on a small scale, like our other reviews which have involved between 30 and 50 firms.”
With self-cert already coming under scrutiny since the BBC’s Money Programme two years ago, which showed some brokers encouraging self-cert clients to inflate their incomes, the mortgage industry said it is waiting with baited breath for the FSA’s findings.
Tony Jones, director of Pink Home Loans, warned that, with the FSA’s recent investigations into the lifetime and non-conforming markets revealing less than positive results, the mortgage industry cannot afford another bad review.
He said: “The FSA’s review into non-conforming showed some firms had possibly inflated clients’ incomes so it’s very concerning. If this self-cert review reveals any negative practices then I would expect the regulator will really start to put its foot down and look at this sector more closely, especially with consumer debt levels being so high. The industry has been given enough warning shots.”
Kevin Morgan, managing director of Consilium Financial Planning, commented: “This is something that needs to be looked into and I welcome these reviews but advisers should be giving appropriate advice all the time anyway. It is the responsibility of the broker to make sure clients have sufficient income to afford the mortgage. If any broker is not complying with this then action should be taken.”
